REVIEWING the situation in Iraq after the Baker-Hamilton report, Iraqi Communist Party central committee member Salam Ali says that Iraq is facing a crossroads and enormous challenges in the period ahead. He identifies the key tasks as national reconciliation and the defence of the political and economic sovereignty of the Iraqi people.

"The Baker-Hamilton Iraq Study Group was established nine months ago and its general proposals were not unexpected, having been widely leaked over previous weeks," he says.

"What gave it political prominence was the defeat of the Bush administration in the recent US Congress elections and the need to re-establish a policy basis acceptable to both Democrats and Republicans. Some elements are welcome. Others could prove dangerous.

"Welcome is the acknowledgement of the disastrous consequences of the Bush strategy for an indefinite US military presence in Iraq as well as its handling of the occupation since 2003." However, Ali continues, "less welcome is the report s failure to set a definite timetable for US withdrawal and opening the door for more interference by regional powers in deciding Iraq s political future. The Iraqi people must be empowered to decide their own destiny with their own free independent will.

"The report simply talks about a possible withdrawal of combat troops in 2008, accompanied by the deployment of a continuing US military force to other duties. This would be a compromise quite acceptable to Bush and on this basis that the US would continue to seek a determining long-term influence.

"The report s proposal for the involvement of regional forces, particularly Syria and Iran, again, has some positive aspects but also holds considerable dangers. Its immediate effect has been to intensify a jockeying for position by Islamists aligned on a largely sectarian basis to regimes outside Iraq.

"Jordan, Saudi Arabia and Egypt would see themselves as threatened by an increasing influence for Iran and would seek to do deals with forces inside Iraq to prevent it. Equally, Islamist political forces in Iraq, currently embroiled in an intense power struggle, would see themselves threatened depending on the outcome."

But the big danger presented by such involvement is that the future of Iraq would be horse-traded over the heads of the Iraqi people and in violation of the political process in Iraq, leading to further political destabilisation.

Such objections would equally apply to an international or regional conference, as proposed by the UN, in vague terms, unless the Iraq government and parliament were actively involved in setting the agenda and objectives.

The strategy of the Iraqi Communist Party, says Ali, has three strands.

First, widening the base of the political process in Iraq. Second, strengthening the cohesion of those political forces that can be brought together to defend national sovereignty and democracy. Third, developing mass activity in defence of critical aspects of Iraq s sovereignty on the economic front.

Widening the base of the political process was the objective of the National Reconciliation Conference held over the weekend of 13-14 December. It was preceded by conferences for civic organisations and for the tribes. But this third conference, for political parties, was the most critical.

It is too early, says Ali, to determine how successful it has been. But it did, significantly, involve some former Ba athists and army officers as well as parties involved in the political process, representing the United Iraqi Alliance (Shi ite), the National Accord Front (Sunni) and the Kurdistan Alliance.

The Communist Party s leader Hamid Mousa spoke on behalf of the democratic and secular Iraqi National List, which currently has 25 deputies.

The conference was boycotted by those Shi ite forces led by Moqtada al-Sadr, despite their representation in the government, and by the Sunni Association of Muslim Clerics, which is opposed to the political process.

Militias and armed groups associated with or tacitly supported by these forces have been deeply involved in the mutual communal violence and sectarian strife. More fundamentally, however, both sides are seeking to use the conflict to assert political control within their own communities over less sectarian forces.

The key issue discussed at the conference was how to overcome the resulting violence that is now threatening to spill over into unbridled communal conflict.

Here, the conference was harshly critical of US policy. The weakness of Iraq s own security forces has been no accident nor has their infiltration by sectarian elements and militias.

As admitted in the Baker-Hamilton report, the US has, for three years, disastrously limited the scale and resources of the Iraqi armed forces and assumed a monopoly control over their training and recruitment. A weak, divided Iraqi army provided the international excuse for a long-term US military presence.

The government, it was argued, must seize back control of security, make full use of professional army resources in Iraq and rebuild the armed forces on a national, non-sectarian basis.

Implementation, says Ali, depends on the second strand of the party s strategy - strengthening the cohesion of the political forces willing to fight for the sovereignty of the Iraqi people, irrespective of sectarian and ethnic divisions.

There are signs of a realignment of political forces and discussions continue for a new initiative to resolve the current political impasse. Among the political parties involved in this are the two Kurdish parties, the (Shia) Supreme Council of the Islamic Revolution and the (Sunni) Iraqi Islamic Party.

One key test is presented by one of the most contentious proposals in the Baker-Hamilton report. This concerns the status of the oil-rich province of Kirkuk with an ethnically mixed population - Kurds, Turcomans and Arabs - and whether it should be part of the federal Kurdistan region.

Currently, this is being resolved internally in line with the agreement incorporated in the constitution endorsed last year. This involves the carrying out of a census and a referendum to be completed within 12 months.

The Baker-Hamilton report proposes postponement of the referendum and the possibility of an externally imposed settlement. This, stresses Ali, could lead to a wholesale unravelling of the constitution and the federal settlement which underlies Iraq s existence as a unified state.

This defence of the constitution is, in turn, linked to the third strand of the party s strategy - defending the economic sovereignty of the Iraqi people. Here, 2007 will also be a critical year.

The assault on the economic rights of Iraqis has been hidden by the communal violence.

The IMF and the World Bank have been putting immense pressure on the Iraqi government, using its inherited debts as blackmail to implement restructuring and neoliberal economic reforms, such as removing the subsidies for food and fuel, abolishing food rations and revaluing the Iraqi currency - measures which would have terrible consequences for an already battered and impoverished population.

Mass protests earlier this year against the price increase of fuel products forced the government to amend its policy.

Strategically, the future of the still publicly owned oil industry is even more important. The constitution defends public ownership and the fair distribution of the revenue to all provinces and sections of the Iraqi people.

But a draft law on the oil sector is going to parliament next month and, again, there is great pressure to open the industry to investment by external oil majors on the pretext of securing new equipment and technology.

Those committed to defending Iraqi sovereignty are demanding that the strategic oil sector remain under public ownership and state control, especially Iraq s huge oil reserves, the second-biggest in the world.

They are also calling for the establishment of an Iraqi national oil company which would administer and supervise the exploration and development of oil and gas fields.

"A very great deal," says Ali, "depends on securing sufficient national unity and national consensus among political forces to defend the fundamental rights and interests of the people and the existence of Iraq as a unified federal and democratic state.

"This is vital economically on a day-to-day basis for the survival of working people. It is also vital if Iraq is to take a stand against imperialist control, rather than remaining a victim of it,